Lead Prices to Remain in the Doldrums, Constrained by Fundamentals [SMM Lead Morning Meeting Summary]

Futures:

Last Friday, LME lead opened at $1,991.5/mt. During the Asian trading session, market activity was sluggish, with LME lead mostly fluctuating between $1,985-1,990/mt. In the European session, the US dollar index significantly declined, leading to a relative rebound in non-ferrous metals. LME lead attempted but failed to reach the $2,000/mt mark. During the night session, LME lead pulled back and finally closed at $1,981/mt, down 0.45%.

Last Friday, the most-traded SHFE lead 2509 contract opened at 16,810 yuan/mt. As expected, lead ingot inventory increased during the delivery period, and SHFE lead moved downwards after a higher opening. For the latter part of the session, it consolidated within the range of 16,775-16,800 yuan/mt, eventually closing at 16,780 yuan/mt, down 0.27%. Open interest stood at 50,401 lots, a decrease of 806 lots from the previous trading day.

Macro:

PBOC: Implementing and refining moderately loose monetary policy. China released July economic data, showing that the monthly YoY growth in retail sales, industrial output, fixed asset investment, and property sales were lower than the previous month. 70-city home prices: The MoM and YoY declines in second-hand home prices in first-tier cities widened, while the YoY decline in home prices across all tiers narrowed. US July retail sales rose 0.5% MoM, marking the tenth consecutive month of real retail sales growth. The University of Michigan's consumer sentiment for August unexpectedly fell, with both short-term and long-term inflation expectations rising.

In the lead spot market last Friday, the center of SHFE lead gradually shifted downward. Suppliers adjusted their quotes according to the market, with no change in discounts compared to the previous day. In Jiangsu, Zhejiang, and Shanghai, quotes against the SHFE 2509 contract were at a discount of 30-0 yuan/mt. Downstream enterprises mainly purchased through long-term contracts, and the spot order market was sluggish. Meanwhile, electrolytic lead smelters continued to trade at small discounts, with mainstream region quotes ranging from a 50 yuan/mt discount to an 80 yuan/mt premium over the SMM #1 lead average price, or a 150-80 yuan/mt discount against the SHFE 2509 contract. In the secondary refined lead sector, due to weak lead prices, some secondary lead producers suspended shipments, showing a strong sentiment of holding back sales at low prices. Quotes for secondary refined lead ranged from a 0-50 yuan/mt premium over the SMM #1 lead average price.

Inventory: As of August 15, LME lead inventory decreased by 575 mt to 261,100 mt. SHFE lead ingot weekly total was 64,844 mt, an increase of 2,510 mt from the previous week.

Today's lead price forecast:

Recently, the impact of environmental protection factors in Anhui has eased, and primary lead producers have largely resumed operations, resulting in relatively loose lead supply. However, the anticipated peak consumption season has not yet materialized, and lead inventories continue to show a slight upward trend. Lead prices are in the doldrums. In addition, news about overseas lead imports arriving in the country is frequent, but it has not yet been verified. Currently, only a limited amount of crude lead from Southeast Asia has entered the market, having a minimal impact on lead prices.

Data Source Statement: Apart from publicly available information, other data are processed by SMM based on public information, market exchanges, and SMM's internal database model, for reference only and do not constitute decision-making advice.